Speaking of charts... USING % NET ADVANCING ISSUES TO FIND BOTTOMS/TOPS
The net of advancing issues, (vs the total issues on the
index), is sometimes said to be useful in predicting trend
changes on the Nasdaq COMP. To test this assertion, I
decided to create some charts, using data from Nasdaq. The
problem though is that the number of issues on the Naz
keeps dropping as the Bear grinds on, thus making longer-
term comparisons suspect. I decided, therefore, to chart
the difference between Percentage of Net Advancing Issues
and the Percentage of Net Declining Issues.
[Note: I titled this post USING % NET ADVANCING ISSUES TO
FIND BOTTOMS/TOPS, rather than Using the Difference
between Percentage of Net Advancing Issues and the
Percentage of Net Declining Issues TO FIND BOTTOMS/TOPS
because the latter is more than the eight words iHub
allows for a title. {g/ng}
{Caveat: I'm not sure I'm explaining this correctly, and
I'm not really even sure I did the math right, as Stat 1
was a long time ago. If anybody spots flaws in my
procedures, please let me know.}
Methodology:
1. I downloaded the data from the NASDAQ web site, which
is available in Microsoft Excel format at at
marketdata.nasdaq.com
2. Next, I used Excel to figure the Net advancers for the
years 2001 and 2002. (Unfortunately, the data that Nasdaq
offers is spotty in coverage, and the "unchanged" issues
data is not available from the year 2000, which is why I
only went back through 2001.)
Formula: [Advancers / (Advancers + Decliners + Unchanged)] - [Decliners / (Advancers + Decliners + Unchanged)]
3. I then reformatted the results into percentages, and
used Excel's "Insert Chart" function to create these
charts.
What is on these charts?
-- All of the charts include the Nasdaq daily close
figures for the period in question.
-- The first chart overlays each day's net advancers. This
chart is extremely "spikey," so I did a bit more work with
the info and created several more charts. The remaining
charts show the COMP closing numbers with a moving average
of Net Advancers superimposed over it. To keep things
simple, (not to mention readable), each chart shows only a
single moving average. The moving averages covered, in
order of appearance, are 5, 8, 13, and 21 days long.
The $64,000 Question:
What do these charts tell us about the direction of the
COMP over the next few days/weeks/months?
In the near-term, i.e., this coming week, these charts
seem to indicate a correction is coming very soon.
Over a longer term, however, comparing these charts to the
patterns they drew during the April 2000 and post
9/11/2001 rallies seems to hint that this rally is not as
dead as many, (including yours truly), have been assuming.
Opinions anyone?
The charts may be viewed at:
investorshub.com |
